Finance Ministry’s rule change may hit 1,000 km road projects

New Delhi: The finance ministry’s decision to treat highway projects as a single entity that cannot be bifurcated into small packages could impact award of about 1,000 km of key infrastructure projects, including the Delhi-Mumbai and Ahmedabad-Dholera Expressways.

As a norm, any public-private infrastructure project costing over Rs 2,000 crore is sent to the PPP Appraisal Committee (PPPAC) and then to the Cabinet for its nod.

However, PPP projects up to Rs 2,000 crore are appraised and approved by the highways ministry’s Standing Finance Committee (SFC). To keep large projects under the finance ministry-set threshold, the highways ministry has been bifurcating large projects.

But in a recent communication, expenditure secretary T V Somanathan told road transport and highways secretary Sanjeev Ranjan that this practice was “not in consonance” with the expenditure department’s guidelines.

Somanathan cited three instances where large projects have been divided into smaller packages to be appraised by the SFC. These included the Ahmedabad-Dholera Expressway, the Vadodara-Mumbai Expressway, and the Vijayawada Bypass in Andhra Pradesh.

According to the communication, the National Highways Authority of India (NHAI) will now have to take big-ticket projects to the PPPAC, but officials said this may stretch the project timeline.

Talking about the impact of such an appraisal method, an official told ET that the award of around 1,000 km of highway projects will be delayed in FY20.

“These projects are being awarded under the Bharatmala programme, and a number of key projects will be delayed as we cannot appraise them internally any more,” the official said.

NHAI has awarded over 2,000 km of highway projects so far in FY20, against a target of 4,000 km.

“If this continues, subsequently, project award will be impacted in the next financial year as well,” the official said.

Union minister for road transport and highways Nitin Gadkari recently unveiled a Rs 3.1 lakh crore plan to build 22 greenfield expressways, as his ministry looks to decongest major cities.

Of the 7,500 km of new roads, NHAI plans to build six expressways of 2,250 km entailing an investment of Rs 1.45 lakh crore, while another 16 greenfield corridors with a length of 5,250 km will require an investment of Rs 1.65 lakh crore.

Among other corridors, Ahmedabad-Dholera, Delhi-Amritsar-Katra, Chennai-Bengaluru, Kanpur-Lucknow, Bengaluru Ring Road, Amritsar-Bhatinda-Jamnagar, Hyderabad-Raipur, and Nagpur-Vijayawada have been proposed.